Is No-Pay the Way?

To save money and increase quality of care for Medicare patients, the government is considering denying payment to hospitals for certain procedures.

Being discharged from a hospital ought to be a welcome event. For Medicare patients, however, too often it means leaving behind much-needed care. Once home they might have trouble filling prescriptions or scheduling follow-up doctor visits. Their recoveries compromised, nearly one in five ends up back in the hospital within a month. Such readmissions cost the government $17.4 billion in 2004, and three-quarters of them could have been prevented, according to the Centers for Medicare & Medicaid Services.

In an effort to cut costs and increase the quality of care, the Senate has drafted a policy to withhold 20% of a hospital’s payment for eight still-unspecified procedures if a certain number of Medicare patients are readmitted within 30 days for a condition related to their initial hospitalization. Whether the House will go along is unclear, but it seems certain that, as part of health reform legislation that is likely to pass later this year, Congress will change the way hospitals are paid for readmissions. In fact, President Obama’s 2010 federal budget is counting on saving $26 billion over 10 years with such a move.

The idea is to force hospitals to do things they always should have been doing, says Robert Wachter, an expert on health care quality and safety at the University of California, San Francisco. It takes a month on average for a patient’s primary care physician to receive a discharge summary from the hospital recommending follow-up care. So when patients next see their physician, he or she is often unaware of the details of the hospitalization, Wachter says. He thinks hospitals should give patients comprehensive, understandable instructions, followed by a phone call several days later. What’s more, he says, every high-risk patient should be assigned a nurse case manager.

Hospitals agree that the discharge process can be improved but argue that legislation would leave them shouldering too much of the burden. “Lots of people either don’t have a primary care physician, or their physician can’t free up time to see them within a month,” says Nancy Foster, vice president for quality and safety policy for the American Hospital Association. “Some patients don’t fill their prescriptions after they leave the hospital, so it’s no wonder they come back. Hospitals can’t fix these systemic issues by themselves.”

Reforming hospital payment for preventable readmissions is just the latest step in the steady march toward improving quality of care while saving Medicare billions of dollars. Last October the CMS refused to pay hospitals extra to treat 10 complications if they occurred after the patient was admitted. Though the new no-pay rule seemed obvious for some “adverse events,” such as leaving a sponge in the abdomen after surgery, others on the list, such as fall prevention, provoked the indignation of doctors and hospitals.

“Feedback from hospitals and specialty societies should be incorporated into assessments of the no-pay strategy’s effectiveness and fairness,” Wachter says. But he adds that the science of prevention must advance, noting that research is too preliminary to determine whether some items are truly preventable—and worthy of punishing hospitals for them.

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